NNPCL Raises Concerns over Lack of Transparency and Due Process in ENI-Oando Onshore Asset Divestment Deal

The Nigerian National Petroleum Company Limited (NNPCL) has expressed strong reservations about the ongoing onshore asset divestment deal between Italian oil major ENI and energy solutions provider Oando. Describing the deal as lacking in transparency and a disregard for due process, the NNPCL seeks to draw attention to crucial clauses in the Joint Operating Agreement (JOA) that may have been overlooked.

The Chief Corporate Communications Officer of the Corporate Communications Department at NNPCL, Mr. Garba Deen Muhammad, clarified that while the national oil company does not object to the deal, it is vital to emphasize the need for strict adherence to the JOA clauses to protect joint venture transactions at present and in the future.

The NNPCL firmly states that its consent was not sought or obtained as a joint venture member during the initiation of the divestment process by ENI to Oando. The national oil company affirms that bypassing its involvement in the divestment deal—a major stakeholder in the arrangement—is ill-advised and a significant breach with the potential to create legal crises and fracture hydrocarbon exploration within the joint venture framework.

In a letter dated September 4 addressed to the Managing Director of Nigerian Agip Oil Company Limited, the NNPCL highlights the far-reaching contractual and legal implications that the divestment deal could have on the Joint Operating Agreement dated July 1991. The letter, signed by Ali Muhammed Zarah, Managing Director of NNPC E&P Limited, brings attention to Clause 19.11 of the JOA, which states that the transfer of participating interest should only occur with the written approval of all parties involved.

The NNPCL emphasizes the point that if the divestment by NAOC (Nigerian Agip Oil Company) is indeed valid, operatorship cannot automatically be transferred to Oando. Instead, it would be incumbent on NEPL and OOL to decide upon a successor operator. The national oil company underlines that the failure to obtain the written consent of NEPL, its upstream operations subsidiary, constitutes a grave breach of the JOA terms and reserves its rights in relation to this breach.

Given the existing agreement, the NNPCL asserts that the need to respect agreements cannot be overstated. It serves as the guiding principle for maintaining harmonious operations in the oil and gas sector. Ignoring proper protocol and dismissing the importance of transparency and due process can have severe consequences on the industry as a whole.

Source of content: OOO News 2023-09-07 News

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